EU’s Cap-And-Trade Freeze Isn’t Long-Term Fix System Needs

By Sean McLernon

Law360, New York (July 8, 2013, 8:32 PM ET) -- The European Union's emissions trading system received a lifeline last week when lawmakers agreed to temporarily block nearly 1 billion allowances from entering the market, but experts say the system's long-term viability depends on the EU addressing fundamental design flaws that led to an initial oversupply.

With the plummeting cost of allowances providing business with little financial impetus to shift toward more renewable energy sources, pro-industry and environmental factions in the European Parliament reached a compromise freezing 900 million allowances until at least 2019.